U.S. President Donald Trump has suggested that a previously scrapped Canada-U.S. oil pipeline project, the Keystone XL Pipeline, could be revived under a new bilateral trade agreement between the two countries. However, some industry experts, including a former executive associated with the project, believe that Trump’s statement may be more politically motivated than driven by the petroleum industry.
Trump made the announcement on social media shortly before the implementation of new tariffs on Canadian goods, indicating a “deal” with Canada and a temporary suspension of tariffs. In his post, he referenced his predecessor, Sleepy Joe Biden, who had halted the Keystone XL project.
Former executive vice-president of corporate development at TransCanada Corporation, now TC Energy, Dennis McConaghy, noted that Trump’s signaling of a potential revival of the pipeline could impact Prime Minister Mark Carney’s decision-making in the upcoming trade negotiations. Since early 2025, Trump has imposed tariffs on various Canadian goods, asserting that the U.S. does not depend on Canadian resources, despite exemptions for key items like oil.
Although the idea of reviving Keystone XL has been met with some cautious optimism, experts like Carlo Dade from the University of Calgary’s School of Public Policy caution that political and environmental challenges could hinder its progress. Valérie Beaudoin, a member of the federal government’s Advisory Committee on Canada-U.S. Economic Relations, believes that the project’s approval would be easier for Carney than Trump due to political uncertainties.
While Trump’s mention of reviving Keystone XL may be seen as a direct response to Biden’s policies, industry analysts emphasize that significant obstacles remain. The project’s cancellation in the past and the evolving market dynamics cast doubts on the feasibility of resurrecting Keystone XL.
South Bow Corp., the company behind the Keystone Pipeline System, has been exploring new initiatives like the Prairie Connector project, which aims to utilize parts of the Keystone XL pipeline for increased crude oil exports to the U.S. Despite these developments, a final decision on the Prairie Connector project is pending.
The company’s CEO, Bevin Wirzba, highlighted the strong long-term demand for Canadian crude in the U.S., pointing to commitments from multiple customers for transportation services. With the global disruptions in the crude oil trade, there is a growing need for improved connectivity to refining and export markets, positioning Canadian crude as a resilient resource for the foreseeable future.